Robert Walker holds vials of fuel pellets his company Bixby Energy developed. Walker was convicted in March of stealing $57 million from the company's 1,800 investors over the course of a decade. (Pioneer Press file)

When Bixby Energy Systems failed to deliver its coal-conversion machinery to Chinese customers, the customers threatened to beat up the people who brokered the deal.

Jeff Wiseman, a principal at Global Partners United, became worried because "we had taken a lot of money from rich Chinese people, and it's a communist country," he testified Thursday in the criminal fraud trial of Bixby founder Robert Walker.

Wiseman also worried of being sent to prison for several years in China.

GPU, the firm representing Bixby in China, also was told by a Chinese customer that "if you don't deliver, we'll do everything we can to lock you out of China forever," Wiseman testified.

Walker, 71, is on trial in St. Paul for allegedly defrauding Bixby's 1,800 investors out of $57 million. He faces decades in prison if convicted on the 18 counts against him. Walker is best known as the founder of Select Comfort, the sleep number bed company, which he left in the 1990s.

Starting in 2007, Bixby Energy, based in Ramsey, Minn., was developing a house-sized machine designed to convert coal into natural gas and produce carbon. The carbon could then be mixed with hydrogen to produce crude oil, a process called liquefaction.

Because the Chinese government controls the price of natural gas, Bixby's machine could never make money with that part of its technology, Wiseman said. That made the liquefaction technology Bixby Energy's major selling point in China.

But technical problems surrounded the machine from its inception.

Wiseman and his firm were introduced to Walker through Gil Gutknecht, a former U.S. congressman from Minnesota's 1st District. Wiseman had worked as a congressional aide to Gutknecht in 2005 and 2006.

Gutknecht later joined the board at Bixby and is expected to testify for the prosecution in Walker's trial.

Walker's defense team still hasn't presented its case in the month-long trial, but has argued that Walker believed in the technology and was duped by others in the company. Two former Bixby associates already have pleaded guilty.

Global Partners was able to find Chinese customers for Bixby and broker deals for the machinery.

In December 2010, frustrated by missed delivery dates and an inadequate response from Bixby, Wiseman and another Global Partners executive showed up unannounced at a Bixby board meeting. They traveled from China and arrived at company headquarters in Ramsey, but they were kept waiting for an hour and a half and fed snickerdoodle cookies, he said.

When they were let in, Wiseman and his business partner offered a "rescue package" that included a $1 million no-interest loan.

"(Bixby) had completely run out of money," he said.

Global Partners did pay a newly hired Indiana firm that was manufacturing the Bixby machine, and paid for shipping to China as well, Wiseman said. Still, the first machine arrived late and was missing key components, Wiseman said.

In late 2010, Global Partners received a subpoena from the U.S. Securities and Exchange Commission, which had launched an investigation of Bixby Energy. The SEC wanted all of Global Partners' materials related to Bixby.

When Global Partners queried Walker, he said the investigation "wasn't a big deal" and that the SEC just wanted to see if GPU was paying bribes to government officials to get contracts. That explanation made no sense, Wiseman said.

Later, GPU also hired a number of engineers to make the machine work as Bixby had represented that it could, but without any success. "No, it doesn't work," Wiseman testified.

Numerous emails were displayed by prosecutors Thursday, showing Walker telling Bixby investors that the delays in China were the fault of unprepared sites, a meddling governor in Inner Mongolia or a massive snowstorm there.

Those claims were either fabricated or embellished, Wiseman said, and the root cause of the delays was Bixby's inability to deliver the machinery on time.